Deferred Compensation

Deferred compensation plans were created in response to the limited amount of retirement income an executive will derive from his or her 401(k) or pension plan. Under a Deferred Compensation arrangement, an executive elects to defer a portion of future income into the plan, which enables him to reach his target income at retirement.

Retirement plans can be either qualified or nonqualified. Qualified plans are fully subject to the Employee Retirement Income Security Act (ERISA) and have precise contribution limits. Nonqualified deferred compensation plans (NQDC) seek exemption from burdensome funding, participation, vesting and disclosure requirements imposed on qualified plans. NQDC plans are maintained by the employer and represent an unsecured employer promise to pay a benefit in the future.

The most common type of NQDC is the Top Hat plan, designed for select executives and highly compensated employees. NQDC plans are not subject to ERISA restrictions, filing or reporting regulations, and cannot be funded with assets set apart from the employer or creditors.

EPIC Financial offers consulting in both the qualified and the nonqualified arena. For non-qualified plans, click on the Deferred Compensation rollover menu to the left. For Qualified Plans click on the menu item to the left. Or Contact us for a consultation.